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Greek polls to 'determine whether Greece stays in Europe': PM

[ATHENS] Greek Prime Minister Antonis Samaras said on Tuesday that a snap election planned for next month would determine whether the country remains part of the eurozone.

"This struggle will determine whether Greece stays in Europe," Mr Samaras said, as he asked the president to dissolve parliament ahead of an election set for January 25.

The looming ballot has already rattled markets and could revive fears of the country's future in the eurozone.

It was called on Monday after lawmakers failed in a third attempt to elect a successor to 85-year-old President Karolos Papoulias, whose five-year term ends in March.

The last election plunged Greece into weeks of political uncertainty and there are fears of a repeat next month given the close race between Mr Samaras' New Democracy conservatives and Syriza, the anti-austerity radical leftists.

"In an unprecedented twist, the new parliament could elect a president and be dissolved again for new elections (immediately afterwards) if a government cannot be formed," wrote liberal Kathimerini daily on Tuesday.

"The elections nobody wanted, held in a climate of uncertainty," said centre-left Ta Nea daily.

Avgi, the Syriza party daily, said a leftist government would give "hope to the peoples of Europe and nightmares to the elites oppressing them."

Greek stocks closed down almost four percent on Monday - having lost a massive 11 per cent earlier - amid fears that front-running Syriza could roll back austerity measures if it wins the election.

The bourse opened with a fresh 0.51-per cent drop on Tuesday.

Syriza had dismissed warnings that its electoral programme could shake the markets but, within hours of the election call on Monday, the International Monetary Fund said it was suspending further bailout payments to Greece until a new government was formed.

"Discussions... will resume once a new government is in place, in consultation with the European Commission and the European Central Bank," said IMF spokesman Gerry Rice.

Greece recently secured a two-month extension to February from its EU-IMF creditors to conclude a fiscal audit that will determine the release of some 7.0 billion euros (US$8.6 billion) in loans.

Syriza, which declined to vote in the presidential ballot in order to force snap legislative polls, wants to raise salaries and pensions, halt layoffs and freeze the privatisation of state assets - key elements of reforms demanded by Greece's EU-IMF creditors.

"This is the beginning of the end of a regime that plunged Greece into poverty, unemployment, misery and despair," Syriza leader Alexis Tsipras told supporters on Monday, promising a "real negotiation" with the country's EU creditors.

The European Union has called on Greeks to stick by the often painful reforms adopted as part of a massive international bailout for the eurozone member state.

"A strong commitment to Europe and broad support among the Greek voters and political leaders for the necessary growth-friendly reform process will be essential for Greece to thrive again within the euro area," EU economic affairs commissioner Pierre Moscovici said.

German Finance Minister Wolfgang Schaeuble has warned the cash-strapped country not to abandon the agreed economic reforms, saying: "they have no alternative".

Ratings agency Fitch warned Tuesday that political uncertainty would likely remain for some months after the elections.